Question 2: (5 Marks)

Fatima owns a beauty salon that provides hair and makeup services for events such as parties and graduations. She uses the accrual basis of accounting to record her companys financial transactions. Here are some of the transactions that occurred during the year:

1. On January 1, Fatima signs a contract with a client to provide hair and makeup services for their graduation on June 1. The total contract amount is SAR 2,000. When should Fatima recognize the revenue for this transaction under the accrual basis?
2. On June 1, Fatima provides hair and makeup services to the client from the January 1 contract. The client pays the full amount of SAR 2,000 on the day of the event. When should Fatima recognize the revenue for this transaction under the accrual basis?
3. On September 1, Fatima provides hair and makeup services to a party client and invoices them for SAR 1,500. The payment is not received until October 15.

• When should Fatima recognize the revenue for this transaction under the accrual basis?